the blog

Investing for the Long Run

The Snowball

I’ve recently been reading a biography on Warren Buffett called “The Snowball: Warren Buffett and the Business of Life”. It is a very interesting biography on Warren Buffett who many call the greatest investor of all time. I would highly recommend this book as it not only talks about Warren’s thinking around investing but also provides great lessons on doing business the right way with integrity.

Investing for the Long Run

One part that particularly resonated with me is Warren’s thoughts on investment horizon. One of his famous quotes is:

“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

It really made me think about some of the decisions that I’ve made and whether it’s for short term satisfaction/gain vs. taking the time to take the long view on things. When we expect that we’ll be investing for the long term, whether it be stocks, rental properties, or friendships and marriages – the small fluctuations don’t matter as much as long as we have confidence in businesses and people around us and believe in them. We’re also much more willing to invest in these businesses and relationships in the short term knowing that the time horizon is long and forever.

I was listening to a podcast on Amazon FBA earlier this morning where a very successful seller said that one of the main reasons why he was successful was that he took the long view on his Amazon products. Therefore he was willing to invest large amounts in advertising (both in Amazon and Google) at a loss to gain sales and reviews that would help him in the long run. This is how he differentiated himself from others who were looking to make quick money and didn’t invest properly in setting up their business for long term success.

We should all take a moment to reflect on the long view and ensure that we’re investing for the long term both in terms of how we allocate our capital and also how we allocate our time with relationships.